Greek banks' EFSF notes eligible for ECB purchases, shares jump

ATHENS, April 15 (Reuters) - Greek banks will be able to
sell some of their European Financial Stability Facility notes
to the European Central Bank under its purchasing programme, an
ECB spokesperson said on Friday, sending their shares higher.

Greek banks hold about 37 billion euros ($41.72 billion) of
EFSF notes. After rounds of recapitalisation, they stand to make
gains on the securities and reduce their ECB borrowing.

"Up to 50 percent of the outstanding amount can be purchased
as this is the limit applicable to securities issued by eligible
international organisations," the ECB spokesperson told Reuters.

"The market jumped on this one-off positive piece of news
after days of negativity," said Eurobank analyst Nick
Koskoletos.

The EFSF notes held by Greek banks had not been eligible for
ECB purchasing, based on an agreement with the European
Stability Mechanism (ESM). Banks could repo them with the ECB to
obtain cheap funding.

"The Eurosystem has an interest in utilising all eligible
bonds in order to support the smooth implementation of purchases
under the Public Sector Purchase Programme," an ESM spokesman
said.

"The Eurosystem is therefore also interested in buying the
notes issued by the EFSF in the context of the recapitalisation
of Greek banks in 2012 and 2013," the spokesman added.

The EFSF holdings were subject to transfer restrictions,
preventing Greek banks from selling them outright to investors.

"The ECB and the EFSF, together with the Greek banks and
Greek authorities, have recently lifted this restriction, which
allows Greek banks to sell parts of their holdings of these EFSF
notes to the Eurosystem within the context of the PSPP," the ESM
spokesman said.

Notes issued by the ESM in the 2015 recapitalisation are not
eligible for the purchasing programme because of their short
maturities.

Apart from capital gains, selling a portion of their EFSF
notes to the ECB could reduce the amount Greek banks borrow from
it.
($1 = 0.8869 euros)
(Reporting by George Georgiopoulos, editing by Larry King)